Relationship of Wipro Ltd. with Nifty 50
Author: Walsh Varughese
F4 2024-26 – 021330024479, ITM Business School, Kharghar, Maharashtra, India
Introduction: Wipro Limited is a leading global information technology, consulting, and business process services company. Headquartered in Bangalore, India, Wipro offers a wide range of services, including IT solutions, cloud computing, artificial intelligence, and digital transformation. Known for its commitment to innovation and sustainability.
Objective: To find out the Beta of Wipro Limited and its significance with respect to Nifty 50.
Data Collection: The data for Nifty 50 and Wipro Limited was downloaded from official site of NSE for the period 1st June 2023 to 31st May 2024. Data was manipulated to get Friday closing prices and weekly returns of Nifty 50 and Wipro Limited was calculated using the formula (Yt+1 – Yt) / Yt * 100 and then Y was regressed on X. Here Y is Weekly returns of Wipro Limited and X is weekly returns of Nifty 50.
Data Analysis:
Weekly Returns of Wipro Ltd = -0.27+1.18 Weekly Returns of Nifty 50
(4.148)
N = 49
R² = 0.27
F = 17.20
P-value = 0.0001
t-Stat = 4.148
Interpretation: The above equation shows the relationship between Nifty 50 and Wipro Limited. The positive sign before 1.18 means there is a positive relationship, if Nifty 50 rises by 1 unit then Wipro Limited also rises by 1.18 and vice versa. The coefficient of Nifty 50 has t-Stat = 4.148, the P-value of which is 0.0001, which is less than 0.05 meaning Nifty 50 is statistically significant at 5% level. Wipro Limited R² is 0.27 which means 27% of Weekly returns of Wipro Limited are explained by Nifty 50. The balance 73% is standard error i.e. it depends on other factors like fundamentals. F is 17.20 and the P-value is 0.0001 meaning it is less than 0.05 meaning the overall model is statistically significant at 5% level.
Conclusion: Wipro Limited is good for short term investment.